Smaller Chinese refineries have hiked import volumes used for blending, the agency reports
Supplies of fuel oil from Russia to China are expected to reach an all-time high of 350,000 barrels in May, Bloomberg reported on Wednesday, citing Kpler ship-tracking data.
According to the agency, smaller Chinese refineries have boosted purchases of fuel oil, which is commonly used for blending and is a less valuable part of the barrel than gasoline and diesel.
Supplies of Russian fuel oil to China saw an upsurge after February, when a price cap on Russian petroleum products adopted by the EU and G7 came into force.
According to Bloomberg, flows have soared over the past several months as Shandong province, home to most of China’s independent refineries, launched quality checks on bitumen mixtures, another favorite feedstock.
“We anticipate that fuel oil inflows to China will remain high in May and will increase further from June,” Jianan Sun, a London-based analyst with Energy Aspects, told the agency.
In January, China issued a lower crude import quota in the first two batches of 2023 compared with last year, meaning that refineries must rely on other feedstocks such as fuel oil for their processing needs. For 2023, the allocation is steady at 16.2 million tons, of which over half could already have been used up by the end of April, Sun said.
Oil demand from the world’s second biggest consumer is expected to increase during the current quarter as Covid infections trend downwards in China’s biggest cities, sending mobility to normal levels.
According to Sun, Russian refiners are projected to boost supplies of high-sulfur straight-run fuel oil and distillate-rich M100 grades to Asia by as much as 140,000 barrels a day in the coming weeks.
Kpler analyst Viktor Katona told Bloomberg that Russia currently supplies up to 40% of all fuel oil imported by China.
This article was originally published by RT.